6 Reasons Why Overthinking Affects Trading & How To Stop It

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6 Reasons Why Overthinking Affects Trading & How To Stop It

6 Reasons Why Overthinking Affects Trading & How To Stop It


Overthinking affects trading when a trader does not have the discipline and patience required to trade. It is a poison that not only takes a toll on your mental health but can affect your physical health as well. Constantly worrying about something changes your personality, way of thinking and inhibits your productivity. If not taken care of, it negatively influences your social and private life. Its effects eventually reflect in your trading skill.

A skilled trader is the one who is always aware of the present situation and does not think too much about the future possible outcomes. If you want to become a successful trader, you have to be in the present moment. Your trading results will not improve if you think more about your trades or if you spend too much time on the charts. Trading success comes when you follow proper risk management techniques and have faith in your system.

How does overthinking affects trading performance?

Before discussing this question, it is very important to understand what exactly overthinking means?

Overthinking is nothing but a habit of thinking too much about something or someone to the point where it has a negative impact on them. Here are some examples of causes of overthinking in trading-

1. Losing streaks-

Traders become highly impacted by their recently failed trades and because of this, they trade without the discipline to recover their losses.

For example, if you are feeling guilty about your recently failed trade you may be thinking like “this trade will be my profitable trade” and because of this, you may trade with heavy quantities. But you have to keep in mind that the previous trade(s) do not influence your present trade. So, stop thinking about this too much, and don’t get overly influenced by your previous losing streak.

2.   Not having a faith in your strategy-

When traders overthink, they start doubting their trading strategy and they start to add some more indicators on the charts which confuses them. And also, many traders tend to change their strategy when it fails sometimes. This type of over-thinking can cost a lot of damage to a trader’s account.

3. Not having control over emotions-

Many amateur traders commit this mistake because at the beginning they don’t have that much control over their emotions. As a result, during trading, they torture themselves for not entering into a certain trade or exiting early from the trade. Let me tell you one interesting fact you can’t catch all the moves in the market. So, don’t waste your time thinking about all these things and try to follow the process.


4. Fear of losing money-

Many traders think too much about the consequences of losing money while trading and they miss good trading opportunities. This problem indicates that either you are trading too many quantities or you are not comfortable with accepting the loss.

As a trader, you are going to risk your money and you have to accept the fact that you are going to make losses in your trading career. But how much you lose in your losing trade and how much you win in your winning trade that matters the most. You should not risk more than a certain amount that you are comfortable with losing on any single trade.

5. Trading based on the news-

This is the main reason why many traders blow up their accounts. Instead of trading based on news, you should trade with the help of price action because price action reflects all the information on the charts.

There are thousands of factors that can affect the market at any given time. Trying to trade based on the news is basically the same as trying to predict the markets. You can’t predict the markets but you can analyse the footprint of the market with the help of price action. Price action always shows the impact of any news about the markets before it actually comes out. So, it’s always better to focus on developing your chart reading skills rather than trading blindly based on any news.

6. Trying to be over smart-

Many traders think that they can beat the market by doing more research or by learning a new trading strategy. However, this is not the truth. You cannot predict the market regardless of how much time you spend analysing the economic data or studying new trading strategies.

How to stop overthinking and start trading?

Up to this, we have seen the adverse effects of overthinking on our trading. Now we will be discussing some solutions that we can implement to get rid of this problem.

1. Have a detailed trading plan

The most impactful thing which you can do to stop overthinking and start trading is to make a trading plan which includes every single detail of your trade. Your trading point will guide you to follow the process. You should refer to your trading plan every day.

It will not only help you to remember what exactly needs to be done but also help you to stay on track mentally. I provide a template of the trading plan which includes every minor detail in my Booming Bulls Elite Trader Course. Your trading plan will help you to maintain discipline and with discipline and focus you can become a successful trader.

2. Practicing the self-control

The hardest part of trading for most of the traders is self-control. One of the most effective ways to implement self-control is to make a trading plan which includes the time for when you will be in front of the charts and when you should avoid being in front of the charts to stop overthinking.

You may not believe this but sometimes you have to leave your trading desk over a longer period so that you don’t overthink and start risking off more money.

3. Eliminate your fear by taking all things into consideration

You can’t entirely control the markets. But certain factors can be controlled by the trader such as risk per trade, stop-loss placement, position-sizing, etc. If you take care of all these things while trading then automatically eliminate your fear of losing the money.

You may have heard this “hope for the best and ready for the worst” similarly in trading you may hope for the profits but you should be prepared for taking a loss on any trade. The most effective way to eliminate fear is to control your risk by considering all the things and following proper risk management techniques.

4. Hold your winning trades, cut your losing trades

Often many amateur traders do exactly the opposite of this. They hold their losing trades with the expectation of profits, as a result, they lose more and they cut their winning trades fast with the fear of loss. Successful traders do the exact opposite of this. They stick with their trade when they are in a profitable trade and they cut their trades very fast when they are at a loss without any ego.

Remember to become a profitable trader you have to limit your losses and you should hold your profits as long as you can. Note that there are certain times where you have to close your trade manually but these are rare case scenarios and it is something you should not do until you have rich experience in trading.

Conclusion –

Your trading success depends upon 3 major factors which are your confidence, your state of mind, and your trading skills. If you want to become a skilled trader, overthinking and over analysing charts won’t just improve your performance. Having confidence in your abilities when you analyse the charts, the state of your mind is equally essential if you want to take advantage of your trading edge.

Generally, trading is considered one of the most difficult professions because you have to control your emotions whenever you trade and it is one of the most difficult things to do. Many amateur traders are stuck in overthinking as a result either they risk off more money or they trade without any plan. That is why I think you may need a simplified and well-structured professional course which I am providing you through the Booming Bulls Elite Traders Mentorship Program which will help you to come out of all these problems and will keep you right back on track.

If you want to know more about Risk Management & Intraday Trading Strategies you can refer to our previous blog on

Importance Of Risk Management In Trading and 10 Best Intraday Trading Strategies.


Open a Demat Account using our link to get support from us – https://bit.ly/3gyhIWN and send your ID to [email protected]

Happy Learning!

Booming Bulls Academy


  1. Thanks Anish sir,

    I read all of things before joining booming bulls academy but after class I understand very well because of your teaching skill, you keep things simple and superb ?

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